Lynch v. Johnson

May 31, 1916

Reporters:: , ,
Before:: Allen, Hoke, Walker, Brown

HOKE, J., concurring in result.

WALKER and BROWN, JJ., writing concurring opinions.

ALLEN, J., dissenting. This is a petition to rehear this case, reported 170 N.C. 110, in which the opinion was filed 17 November, 1915. On the same day we filed another opinion, Hinton v. Williams, 170 N.C. 115, on the same point, both decisions being rendered by a unanimous Court. The petition to rehear presents no question that was not discussed and considered on the former hearing, and no authority or argument appears to have been overlooked.

In the former decision we held that as the plaintiff and the defendants claimed under a common source of title, the defendants\’ deed being recorded and the plaintiff claiming under an unrecorded deed, the plaintiff was not entitled to recover, and that since the amendment of 25 June, 1910, to the Bankruptcy Act the conveyance to the trustee in bankruptcy had exactly the same effect as if it had been made (under the Connor Act) to a purchaser for value.

(613) The evidence, in brief, is that in 1895, C. R. Johnson purchased a tract of land from W. E. Shallington and received a deed therefor in consideration of the payment of $550. The plaintiff Lynch alleges, and his witness Johnson testifies, that Lynch paid him one-half of this amount and that he agreed to convey one-half to said Lynch. He further testified: “Shortly after I purchased this land in 1895 and within four or five years thereafter I made, executed, and acknowledged a deed conveying a half interest in the same to the plaintiff Lynch. I placed this deed, in a stamped envelope with my return address on it, in the postoffice, directing the same to the plaintiff. Mr. Lynch told me afterwards that he did not receive this deed. I was adjudged a bankrupt in the District Court of Virginia in 1911; the property described in this action was sold on 4 May, 1914. I did not tell Mr. Davis (the trustee in bankruptcy) or any one else that Mr. Lynch claimed an interest in the same. After the sale was made I asserted a right of dower in the entire tract in behalf of my wife, and I executed with her a deed to the Juniper Corporation (the purchaser), releasing her right of dower in the same. The deed which I mailed to Lynch bore my return address. The deed was never returned to me. I have not seen the same since I mailed it.” The plaintiff Lynch also testified: “Johnson told me some time ago that he had executed a deed to me for a half interest in this land; that the same had been mailed to me. I never received this deed. I have never listed the property for taxation since it was purchased in 1895.”

It is sufficient that we rest the decision on the uncontradicted testimony of the plaintiff\‘s witness, Johnson, that he duly executed and acknowledged the deed and placed it in the postoffice postpaid, directed to Lynch, and with Johnson\‘s return address on the envelope, and that the deed was not returned to him. Johnson testifies that he told Lynch of this execution and deposit of the deed in the postoffice and Lynch testifies that Johnson so told him. There is no evidence contradicting this fact. This was a delivery to the addressee and completed the execution of the instrument, for there was nothing more the grantor could do. This was so held in McKinney v. Rhoads, 45 Pa. St. (5 Watts), 343.

In Phillips v. Houston, 50 N.C. 302, it is held that the delivery of a deed to a third person, signed and sealed to be proved and registered, without retaining any authority or control over it, was a complete delivery. This case cites Hall v. Harris, 40 N.C. 303, which holds that there is a delivery of a deed when, “signed and sealed, it is put out of the possession of the maker.” In the present case the uncontradicted testimony of the plaintiff\‘s witness is that the deed was not only signed and sealed, but was duly probated; and when it was put in the mail it was beyond the control of the grantor and was a delivery. Phillips v. Houston, supra, cites many cases to the same effect and is itself (614) cited in many other cases. See Anno. Ed. Among these cases is Robbins v. Rascoe, 120 N.C. 80, where the Court held that when “the maker of a deed delivers the same to some third party for the grantee, without retaining any control over it, the delivery is complete and the title passes at once, although the grantee may be ignorant of the fact, and no subsequent act of the grantor can defeat the effect of such delivery. ” That case cites many others, as Threadgill v. Jennings, 14 N.C. 384, “A deed is good if delivered to a stranger to the use of the obligee,” and Tate v. Tate, 21 N.C. 26, where the deed was delivered to the uncle of the parties for the benefit of his infant children, and after his death the grantor obtained possession of it before its registration and canceled it, the Court held that the title was in the children. There is also cited in Robbins v. Rascoe, supra, Kirk v. Turner, 16 N.C. 14, where the Court held that the deed being “delivered to a third party to be carried to the grantee, the acceptance is presumed until the contrary is shown.” And in the present case the grantee, when told of the execution and deposit of the deed in the postoffice, did not repudiate it nor deny the fact. In Morrow v. Alexander, 24 N.C. 388, a father living in South Carolina delivered the deed for his daughter to his son, to be delivered to his daughter, and the Court held that the execution was complete and the title passed. In McLean v. Nelson, 46 N.C. 396, also cited in Robbins v. Rascoe, supra, the Court held: “When one delivers a deed to a third person, in the absence of the grantee, the latter is presumed to accept it, so that it forthwith becomes a deed, and the legal effect is to pass the property.”

The above case, Phillips v. Houston, that the delivery of a deed to some third party for the grantee, without the grantor retaining any control over it, is a “delivery complete, and the title passes at once, although the grantee may be ignorant of the facts,” is cited and approved by Brown, J., in Fortune v. Hunt, 149 N.C. 360, and Walker, J., in Buchanan v. Clark, 164 N.C. 62. In the present case the absolute delivery of the deed, duly probated, by placing it in the postoffice, postage paid, directed to the grantee, is proven by the testimony of the plaintiff\‘s witness, who testifies, also, that he told the grantee that this had been done, and the grantee testifies that he was so informed, and offers no testimony to deny it or that he declined to accept the title. It follows that the legal title thus passed in pursuance of the previous parol agreement (if it existed) put an end to the trust, and this legal title was not destroyed by the loss of the deed any more than in the above cases where the grantor, subsequently obtaining possession of the deed, destroyed it before registration. It was the grantee\‘s own fault (the plaintiff in this action) that he did not apply to Johnson to execute the deed, nor institute proceedings under Revisal, 336, to compel reexecution of the (615) lost deed and to register the same. He could have filed lis pendens if necessary, to protect his rights during such proceedings.

The plaintiff, not having caused the deed to be reexecuted and registered, is in no better position than if he had lost the deed or destroyed it before registration. The legal title was passed to him by the execution of the deed, and upon discovering its loss he could have had a reexecution or a duplicate registered.

But even if the delivery of the deed to a third party for him was not shown by the testimony of his own witness and by his failure to negative such delivery, or, when told of the fact, to repudiate the transaction, was not sufficient, there are other reasons why the plaintiff cannot recover. Equity will not enforce a stale claim. On the evidence here of the plaintiff, it was more than nineteen years after the alleged oral agreement was made to convey a half interest in this land to him before he took any steps to assert his rights. It was fifteen years after the deed was deposited in the postoffice, duly executed and directed to him, before he moved in the matter; the grantor went into bankruptcy in 1911, and for three years he took no steps to notify the trustee in bankruptcy that he had any claim, though the land was fully described in the advertisement thereof; and he did not object to the confirmation of the sale. It is true, he testified that at the sale, in an ordinary tone of voice, he stated to the crier (not to the trustee or the purchaser) that he claimed an interest in this land. The trustee in bankruptcy and Mr. Hardy, president of the National Bank of Norfolk, who was president of the Juniper Corporation and bought the land for said company, both testified that they did not see Lynch at the sale, and had no notice at that time or any other before this action was brought that the plaintiff asserted any interest in the land. The land when conveyed to Johnson brought $550, of which the plaintiff claimed that he paid $275 to Johnson for a half interest. It is now worth $4,000. In Hamlin v. Mebane, 54 N.C. 18, it was held that equity would hold less than twenty years an abandonment. See citations in Anno. Ed.

Moreover, since the adoption of the Constitution the Revisal, 399, after providing limitations for legal proceedings, enacts as follows as to equitable proceedings: “An action for relief not herein provided for must be commenced within ten years after the cause of action shall have accrued.” It was held: “This section covers all causes, equitable and legal, not otherwise provided for.” McAden v. Palmer, 140 N.C. 258.

“An action to have a trust declared and a conveyance would be barred by ten years.” Norcum v. Savage, 140 N.C. 472. In Phillips v. Lumber Co., 151 N.C. 521, it is held: “An action to have a party declared a trustee is barred by ten years. Johnston v. Lumber Co., 144 N.C. 717; Norcum v. Savage, 140 N.C. 472; Id., 258; Ritchie v. Fowler, 132 N.C. 788; Norton v. McDevit, 122 N.C. 759.” The evident object of this section, Revisal, 399, was to (616) substitute for the provision as to stale claims obtaining in equity the definite period of ten years. Even if the ten years should not be counted, from the time when the alleged oral agreement was made in 1895, it certainly ran from the time that the executed deed in pursuance of the oral agreement was placed in the postoffice in 1899 or 1900, of which he was notified, according to testimony both of Johnson and Lynch himself. It was, however, some fifteen years after that date before he brought this action to set up the alleged oral agreement, which he had notice had been terminated by the delivery of the deed to the postoffice for him.

Independent of the above grounds, either one of which is fatal to the plaintiff\‘s claim, Revisal, 980 (the Connor Act), which was passed to prevent frauds and perjuries and to insure purchasers protection against secret and latent liens and claims under unregistered deeds and conditional sales, provides: “No conveyance of land, or contract to convey, or lease of land for more than three years shall be valid to pass any property, as against creditors or purchasers for a valuable consideration, from the donor, bargainor, or lessor, but from the registration thereof, within the county where the land lies.” It is unnecessary to cite the numerous cases sustaining this act, and holding that no notice, “however full and complete,” can avail when such conveyance or contract or lease is not registered.

The plaintiff claims under a contract to convey. If that contract was in writing it would be utterly valueless, no matter how full the notice of its existence, unless it was duly registered, as against a creditor or purchaser for a valuable consideration. Under the act of Congress amendatory to the Bankrupt Law, 25 June, 1910, the trustee in bankruptcy represents the creditors and is a purchaser for value. If, therefore, the contract was in writing, being unregistered, it could not avail against creditors, or the trustee in bankruptcy, who represents them. The plaintiff certainly cannot occupy any better position by reason of the fact that his contract was not in writing and, therefore, could not be registered. It was his duty to have had the contract placed in writing and recorded. He has delayed to do so for nineteen years, and this laches is inexcusable. He failed for more than fifteen years, to have the deed reexecuted after its delivery in the postoffice in 1899 or 1900, and is certainly barred by Revisal, 399. He is also barred by the fact that, the title having been passed to him by the execution of the deed, he did not have it reexecuted and recorded.

It would be indeed a strange anomaly if Revisal, 980, which requires “contracts to convey” to be registered in order to prevent frauds and perjuries and to give purchasers security against oral evidence of unrecorded or secret and latent liens, should not require oral contracts to be put in writing and registered, but should exempt them from such (617) registration on the ground that, being oral, they could not be registered.

We will not be understood as applying this to oral trusts arising ex maleficio by fraud or duress. That proposition is not presented in this case for consideration, and we make no intimation in regard to such cases. We are holding that under the language and spirit of the Connor Act it applies to contracts to convey, whether oral or written.

The act amendatory to the Bankrupt Act, 25 June, 1910, places a trustee in bankruptcy not only in the position and with rights of creditors, but endows him “with all the rights, remedies, and powers of a creditor holding a lien by legal or equitable proceedings,” which includes, of course, the position of a judgment creditor. This statute was enacted to correct the decision of the United States Supreme Court in the Cassell case, 201 U.S. 304. It has been repeatedly so held in the cases cited in the former decision of this case, 170 N.C. 110, and in the opinion filed the same day, in Hinton v. Williams, 170 N.C. 115, and has been more recently sustained in Fairbanks Steam Shovel Co. v. Wills, 10 April, 1916, in which it is held (36 Supreme Court Reporter, 466) that the mortgagee in a chattel mortgage unregistered cannot perfect his title as against the bankrupt by taking possession of the property, if the mortgage was not recorded at the date of filing the petition. It is also held in Bailey v. Ice Cream Co., 36 Supreme Court Reporter, 50, that the rights of the trustee in bankruptcy are those of a creditor having a lien by judgment or equitable proceedings on the date of filing the petition. Here the petition was filed in 1911, and the plaintiff did not bring his action till three years later, after the property was duly advertised, sold, sale confirmed, and deed executed.

Petition dismissed.

HOKE, J., concurs in result.